CD Marketing Brian\'s CD Rental

CD Marketing

Brian's CD Rental Plan: Problems on the Horizon

Not only has Brian failed to complete the necessary marketing research before he attempts to launch this business and engage in what he believes is a potential opportunity, he has not even begun the process of conducting this research. According to the language of the provided scenario, Brian "believed that a service providing the online rental of CDs made perfect sense," "was confident that the success of the other rental services proved that there was a market for the online rental of entertainment media," and "believed that 'any true fan of an artist would want the entire album'" (all emphases mine). That is, Brian's business plan makes perfect sense in Brian's head, and according to what Brian thinks and believes there would definitely be a market for a CD rental business, but these thoughts and beliefs have not been borne out by any empirical and objective research -- it is all conjecture.

Before Brian could ever hope of finding investors, striking deals with record labels, and the other many necessities of starting this business, he would need to determine the actual market for his product. Consumer surveys, for example, could determine how much -- of anything -- people would be willing to pay to have a CD for a limited period of time, without being able to listen to it after the term of the rental had expired. There is a great deal of competition in this area, with album samples, streaming radio stations and artist webpages, and other forms of non-physical data transmission that would accomplish similar ends for the consumers, often at no charge or for a nominal monthly fee. Determining the actual market potential means assessing the competition, as well.

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The first and most obvious note of caution I would provide to Brain based on the case scenario is to eliminate the guesswork from his plan/proposal. He should know, not believe, that there is a market for CD rentals, and should have an empirical method of predicting rentals-per-customer in order to reasonably guess at his revenues. The issue of expenses is also not addressed at all; licensing and production costs will be astronomical at the outset, and no mention of original capital is made in his business proposal. There are also the many situation-specific problems with the fundamental product concept -- CDs are already falling out of favor with consumers, being replaced with digital music files that are less corruptible and more easily transported in addition to being cheaper to produce and to purchase. Finding a market for CD rentals when the cost of album ownership is so low could prove difficult.

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